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Wilmington Announces 2016 Year-End Results

TORONTO, ONTARIO--(Marketwired - Mar 15, 2017) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A)(TSX:WCM.B) reported a net loss attributable to shareholders for the three months ended December 31, 2016 of $0.5 million or ($0.05) per share compared to a net loss of $2.1 million or ($0.21) per share for the same period in 2015. For the year ended December 31, 2016, the Corporation realized a net loss attributable to shareholders of $1.6 million or ($0.16) per share compared to a net loss of $1.5 million or ($0.17) per share for the previous year.

2016 FINANCIAL HIGHLIGHTS

The financial highlights of the Corporation and those of its associated and controlled entities are set out below. Investments in associated and controlled entities account for the majority of the Corporation's financial results and are accounted for using the equity method of accounting or a consolidated basis.

Self-storage facilities

  • Real Storage Private Trust (42.5% owned - the "Trust") generated net operating income of $10.6 million for the year ended December 31, 2016, a 18% increase from the comparable period in 2015. The Ontario portfolio continued to perform well and occupancy levels and operating margins are beginning to stabilize in the Alberta portfolio as the energy sector enters its first leg of recovery.
  • In August 2016, the Trust sold a self-storage facility located in Ottawa, Ontario in exchange for a self-storage facility located in London, Ontario.
  • In June 2016, the Trust acquired a facility in Ontario for total consideration of $3.9 million.
  • The Trust made distributions in the amount of $1.5 million (2015 - $1.0 million) to unit holders during the year representing the equivalent of 4% of invested capital per annum.

Private equity

  • On September 30, 2016, a strategic partner specializing in the oil and gas industry subscribed for 45% of the issued and outstanding shares of Northbridge Capital Partners Ltd. ("Northbridge") and management subscribed for 10%. The Corporation's ownership of Northbridge now stands at 45% and its mandate was expanded to include raising and deploying capital for investment in the energy and real estate sectors as well as special situations.
  • On September 30, 2016, Northbridge closed its first energy fund under the new ownership, totaling $30.9 million. The Corporation subscribed for $1.0 million.
  • Network 2012 Fund distributed $3.2 million to unitholders in the year (2015 - $5.7 million).
  • Northbridge's assets under management now stand at approximately $41.8 million (December 31, 2015 - $29.5 million).

Discontinued operations

  • In light of the continued weak outlook for natural gas prices, the Shackleton 2011 Limited Partnership ("Shackleton Partnership") initiated a plan to sell its assets. The sale is expected to close in 2017.
  • Shackleton Partnership proved plus probable reserves as at December 31, 2016 were valued at $7.1 million and are unchanged from the year ended December 31, 2015.

As at December 31, 2016, Wilmington had assets under management in its operating platforms of approximately $168 million ($53 million representing Wilmington's share).

OPERATIONS REVIEW

Self-Storage Facilities

Real Storage Private Trust

For the year ended December 31, 2016, net operating income increased 18%, or $1.6 million due to the benefits of an improving Alberta economy, higher realized annual rent per occupied square foot and the results from 10 self-storage facilities acquired since January 2015.

Private Equity

Northbridge Capital Partners Ltd. ("Northbridge") and Northbridge Fund 2016 Limited Partnership

In 2016, the Corporation completed a key initiative by aligning the ownership of Northbridge with a strategic partner specializing in the oil and gas industry. The ownership makeup of Northbridge consists of 45% owned by each of Wilmington and the strategic partner and 10% by management.

Concurrently Northbridge closed a $30.9 million energy fund ("Northbridge Fund 2016") having a mandate to invest in public and private companies in the energy sector. The Corporation subscribed for $1.0 million in Northbridge Fund 2016, of which $100,000 has been funded as at December 31, 2016.

Northbridge's assets under management amounted to approximately $41.8 million as at December 31, 2016, an increase of $12.3 million in assets under management from December 31, 2015.

Discontinued operations

Shackleton 2011 Limited Partnership

The Shackleton Partnership owns and operates a 100% interest in natural gas assets in Southwestern Saskatchewan. Production during the year ended 2016 declined 8% compared to the same period in 2015 to 486 boe/d. The Shackleton Partnership realized a netback of $0.46 per mcf in the year ended December 31, 2016, a decrease of $0.48 per mcf compared to 2015 primarily due to a 20% decrease in natural gas prices. Despite the improvement in natural gas prices in the fourth quarter of 2016, realized natural gas prices continue to be depressed. Moreover, the longer-term outlook remains weak given the oversupply of natural gas in North America. In light of these conditions, the Shackleton Partnership initiated a plan to sell its natural gas assets.

The Shackleton Partnership has drawn $4.01 million of the $4.04 million available under its Revolving Loan Facility. The amount available is reduced monthly by increments of $30,000 until the interim bank review expected to be in May 2017. The loan is secured solely by a floating fixed charge over the assets of the Shackleton Partnership.

OUTLOOK

The last 2 years have weighed heavily on companies invested in the oil and gas industry, particularly those dependent on natural gas pricing. With the completion of the sale of the Shackleton Partnership natural gas assets, Wilmington will no longer be invested in hard assets in this sector. The Corporation will concentrate on growing its two core businesses being - the private equity platform and the self-storage business as well as seeking out new opportunities. The added skill sets brought about with the realigned ownership and management of Northbridge positions the Corporation exceptionally well to participate in the oil and gas sector as it moves into the recovery phase as well as in opportunities the real estate sector. The self-storage business held through Real Storage Private Trust is expected to show continued growth generated both organically and through development and acquisition. Wilmington is optimistic in the opportunities and growth that will unfold in the year ahead.

FINANCIAL RESULTS
CONSOLIDATED STATEMENTS OF LOSS
(unaudited) (audited)
For the three months ended
December 31,
For the years ended December 31,
(CDN $ Thousands, except per share amounts) 2016 2015 2016 2015
Revenue
Investment and other income 21 31 266 184
Expenses
General and administrative 271 325 827 944
Business development costs 70 --- 593 ---
Stock-based compensation 46 11 203 35
Loss from continuing operations before the undernoted (366 ) (305 ) (1,357 ) (795 )
Share of net income (loss) from Real Storage Private Trust 233 (48 ) 334 604
Loss on ownership change in Real Storage Private Trust --- --- --- (83 )
Share of net income (loss) from Network Capital Management Inc. (102 ) (40 ) (155 ) 89
Loss on ownership change in Northbridge Capital Partners Ltd. (176 ) --- (10 ) ---
Share of net income (loss) from Network 2012 Limited Partnership (14 ) (18 ) 28 1,196
Share of net loss from Northpoint Resources Ltd. --- --- --- (583 )
Income (loss) from continuing operations before income taxes (425 ) (411 ) (1,160 ) 428
Income tax expense 5 8 33 135
Net income (loss) from continuing operations (430 ) (419 ) (1,193 ) 293
Net loss from discontinued operations, net of tax (54 ) (2,805 ) (658 ) (3,049 )
Net loss (484 ) (3,224 ) (1,851 ) (2,756 )
Net income (loss) from continuing operations attributable to:
Owners of the Corporation (430 ) (419 ) (1,193 ) 293
Non-controlling interest --- --- --- ---
(430 ) (419 ) (1,193 ) 293
Net loss from discontinued operations attributable to:
Owners of the Corporation (461 ) (2,078 ) (389 ) (1,805 )
Non-controlling interest (23 ) (1,146 ) (269 ) (1,244 )
(484 ) (3,224 ) (658 ) (3,049 )
Net income (loss) per share from continuing operations:
Basic (0.05 ) (0.21 ) (0.12 ) 0.03
Diluted (0.05 ) (0.21 ) (0.12 ) 0.03
CONSOLIDATED BALANCE SHEETS
(audited) (audited)
As at December 31, December 31,
(CDN $ Thousands) 2016 2015
Assets
Non-current assets
Investment in Real Storage Private Trust 15,864 16,107
Investment in Northbridge Capital Partners Ltd. 280 257
Investment in Network 2012 Limited Partnership 2,019 3,315
Investment in Northbridge Fund 2016 Limited Partnership 100 ---
Natural gas property, plant and equipment --- 5,752
Deferred income tax assets 606 622
18,869 26,053
Current assets
Accounts receivables and other assets 1,114 1,057
Cash 3,590 3,993
4,704 5,050
Assets held for sale 5,614 ---
Total assets 29,187 31,103
Liabilities
Non-current liabilities
Decommissioning liabilities --- 1,074
--- 1,074
Current liabilities
Accounts payable and accrued liabilities 682 861
Revolving loan facility --- 4,350
682 5,211
5,371
Total liabilities 6,053 6,285
Equity
Shareholders' equity 23,052 24,467
Non-controlling interest 82 351
Total equity 23,134 24,818
Total liabilities and equity 29,187 31,103
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited) (audited)
For the three months ended
December 31,
For the years ended December 31,
(CDN $ Thousands) 2016 2015 2016 2015
Net loss (484 ) (3,224 ) (1,851 ) (2,756 )
Items that may be reclassified to net loss
Share of other comprehensive income (loss) from equity accounted investees 18 (536 ) (143 ) (3,638 )
Deferred income tax expense (recovery) 2 (88 ) (20 ) (491 )
Other comprehensive income (loss) 16 (448 ) (123 ) (3,147 )
Comprehensive loss (468 ) (3,672 ) (1,974 ) (5,903 )
Comprehensive loss attributable to:
Owners of the Corporation (445 ) (2,526 ) (1,705 ) (4,659 )
Non-controlling interest (23 ) (1,146 ) (269 ) (1,244 )
(468 ) (3,672 ) (1,974 ) (5,903 )

Executive Officers of the Corporation will be available at 403-705-8038 to answer any questions on the Corporation's financial results.

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included in this news release may constitute forward-looking statements or information under applicable securities legislation. Forward-looking statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial conditions, expected financial results, performance, opportunities, priorities, ongoing objectives, strategies and outlook of the Corporation and its investee entities and contain words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation.

While the Corporation believes the anticipated future results, performance or achievements reflected or implied in those forward-looking statements are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond the Corporation's control, which may cause the actual results, performance and achievements of the Corporation to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

These risks and uncertainties include but are not limited to: the ability of management of Wilmington and its investee entities to execute its and their business plans; health, safety and environmental risks; uncertainties as to the availability and cost of financing; general economic and business conditions; the possibility that government policies or laws may change or governmental or regulatory approvals may be delayed or withheld; risks associated with existing and potential future law suits and regulatory actions against Wilmington; and other risks and uncertainties described in Wilmington's filings with Canadian securities regulatory authorities.

The foregoing list of important factors that may affect future results is not exhaustive. When relying on the forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statements or information, that may be as a result of new information, future events or otherwise. These forward-looking statements are effective only as of the date of this document.

This new release contains natural gas volumes which have been converted on the basis of six thousand cubic feet of natural gas to one barrel of oil equivalent. Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.